Warning: Underinsurance could cost your dearly
Only 48% of home contents policies automatically increase the sum insured each year in line with inflation, according to research by Gocompare.com.
And only 3% of home contents policies have an unlimited sum insured.
This means that the majority of policyholders could see the value of their cover eroded over time if they don’t remember to increase their sum assured, or switch to a cheaper deal with a higher level of cover.
However, a quarter of homeowners have been with the same insurer for five years or more while 13% haven’t changed insurer for 10 years or over. If these policyholders haven’t reviewed their insurance needs and kept the value of their home’s contents up-to-date, they could find that they are inadvertently underinsured.
Time to review
Gocompare.com Home Insurance is urging people to regularly review the value of their home contents to avoid the risk of underinsurance. Householders underestimating the replacement cost of their home’s contents, or deliberately undervaluing them to save money, could be thousands of pounds out of pocket if they need to make a claim – making an already stressful experience much worse.
Ben Wilson from Gocompare.com Home Insurance said: “It’s surprising how quickly our belongings and household contents change over time. And, it’s all too easy to fall short on home insurance cover, particularly if you haven’t reviewed your arrangements for 5 to 10 years.
“Over the last decade or so, the nature and value of our home’s contents has changed. One major change has been in the amount and value of technology and entertainment systems we now have in our homes – from computers, ipads and laptops to home theatre systems and online gaming systems. Now, instead of just one telly in the corner of the lounge, it’s not unusual for homes to have a number of TV sets throughout the house.”